Rice MBA Capstone students re-energize 61-year-old Houston nonprofit

The Houston Public Library System includes the Central Library; three Special Collection libraries, including Houston Metropolitan Research Center, Clayton Center for Genealogical Research and African-American Library at Gregory School; four Regional Libraries; 31 Neighborhood Libraries; four Express libraries; one Mobile Express Library; and one Satellite Library at Children's Museum of Houston.

Jesse H. Jones is smiling! A 61-year-old Houston nonprofit organization has been re-energized thanks to recommendations made by recent graduates of his namesake business school at Rice University. With the adoption of new technology, organizational changes and a fresh infusion of volunteers — including several up-and-coming Houston executives — The Friends of the Houston Public Library is better positioned to fulfill its mission of “fostering wider recognition, use and support of the Houston Public Library System.”

The graduates were students in Adjunct Professor David VanHorn's 2013 capstone course, an applied-strategic planning requirement for fully-employed students. Offered each spring semester, the course places teams of Rice MBA students with Houston nonprofits that have sought the school’s assistance to solve strategic challenges.

Almost 100 nonprofits have benefited from the course since it began in 2008; 27 organizations are involved in the 2014 capstone program.

“For The Friends, the most important outcome is that we have delivered a high-impact, actionable strategic plan that can help them better fulfill their mission,” said VanHorn. “For the students, the most important outcome is that they had a great learning experience from an academic perspective — applying their strategic planning skills in a real-world environment — and that they better understand how their capabilities can help a community organization or cause.”

The challenges

The Friends’ primary challenge was the year-over-year decline of the size of annual grant that they raised for the HPL through sales of new and used books, CDs, DVDs and other materials it receives in donations. Operational issues included an overwhelmed, inefficient, and volunteer-intensive system and warehouse, as well as difficulties consistently growing a small volunteer base with fresh talent and perspectives. More broadly, the Friends were only scratching the surface of fulfilling its mission of “fostering wider recognition, use, and support of the Houston Public Library.” Their brand awareness and interaction in the community was extremely low due to minimal marketing and outreach. With technology changing how the public accesses and uses information, the Friends could play a critical role in connecting the public to how the Houston Public Library is changing its delivery of its mission and plays a key part in a community’s life.

“Just about everything needed some sort of update or realignment to the mission,” said Kevin McNeilly, chair of one of the capstone teams selected to work with The Friends and an engineer with BP. McNeilly joined The Friends board in 2011 through the Jones School's Board Fellows program (“an awesome program”), and nominated the nonprofit for the capstone program.

“I had experience with the organization and knew we needed to make changes if we wanted to be an `impactful' organization for Houston,” said McNeilly. “I thought that the organization was headed into irrelevance and needed people with fresh, high-quality ideas to stop that from happening.”

Two data-backed solutions

McNeilly's team included Brian Jaffe, dean of students, YES Prep Gulfton; Ankur Dayal, technology transfer associate, University of Houston; Samantha Hobbs Kast, consultant, Enite; and Andrew Clifton, healthcare advisory senior associate, KPMG.The most critical challenge they observed was the “messy, sort-by-hand and completely overwhelming … system” the nonprofit utilized to sort and process books for resale. They proposed implementing Neatoscan For Libraries, a software scanning system developed specifically for non-profit groups who want to maximize the value of their donations and weeded materials. More than 50 Friends groups and nonprofits utilize this system nationwide.

Instead of an annual book sale, McNeilly's team recommended four community-based sales each year at lower-cost venues to maximize net proceeds and visibility. (Past annual three-day sales were held at the George R. Brown Convention Center at a cost of $25,000. The nonprofit's net was only $65,000.)

His team also proposed revitalized volunteer recruitment efforts; adding membership benefits; hiring a staff member to oversee operations; revamping the board's structure and adding new members to cover knowledge gaps; and building brand awareness.

“We were impressed with the sophistication of the reports,” said Doug Havlik, president of The Friends board and a 2000 Rice graduate. “The reports were huge catalysts for change, which we really needed. The board was confident in the presentations and thus in our decision to make changes.”

Favorable outcomes

Neatoscan was implemented in June 2013, based on a monthly percentage of sales that has never exceeded 2.5%. The Friends' annual revenues from online book sales are estimated to increase from $12,000 to $150,000, McNeilly said. “This is huge when you consider our annual donation to the library system is typically around $50,000. Our average price has been lowered but we are now selling 13,000 books instead of 1,000 books per year.”

Next, the board canceled its annual book sale, which it had hosted for 35 years. “This was a big leap of faith because that's what we've been known for,” McNeilly said. Holding multiple, smaller sales within different communities provides a “great opportunity to market the organization.” The first community book sale was Jan. 23-25 at Resurrection Metropolitan Church in the Heights. It netted roughly $24,000.

At McNeilly's invitation, fellow Rice MBA alum Matt Marquart, an “advertising/marketing guru” who recently started his own advertising firm, HandBuiltBrands, joined the board and has created a new website (www.friendsofhpl.org) and established a social media presence.

A staff member was hired in January to oversee warehouse operations, and Havlik is anticipating a donation from his employer, Superior Energy Services, to help cover wages. Also in January, the board held its first retreat where it set five concrete objectives through June 2015.

The nonprofit now counts 300 volunteers among its ranks due to relationships The Friends established with Volunteer Match, Volunteer Houston and high school student groups. Membership benefits have been added, including T-shirts and discounts to book sales.

The organization's board structure has been revamped to include officers with specific responsibilities and committees. Five new members have joined the board, including Marquart, Guillerman, who is heading up membership and volunteers efforts, and Rice MBA student Paul Cannings, who is in the Board Fellows program.

“The problem wasn’t a lack of ideas,” said McNeilly. “The problem was finding the people with the energy and right skill set to implement change. For example, no one on the board was looking at longitudinal trends to see how operations were affecting the bottom line. Ultimately, our job is to make a donation to the library so maximizing our income is our mission, to a point.”

(In 2013, The Friends donated more than $147,000 to the HPL System to support children's reading and after-school programs, programming, and employee recognition, recruitment, training and development.)

McNeilly said his team members drew from their cost accounting and marketing classes “but the single most helpful class was change management. I never appreciated how challenging it is to effect change and the need to communicate those changes multiple times or else the message will get lost.”

He also credited Professor VanHorn for helping the team visualize where the organization stood at the beginning of Capstone (the smaller bubble) and where it could be (the much larger bubble). “He showed us that a mission statement is very tangible; something you can measure and track.”

McNeilly said the most significant outcome for The Friends, aside from a projected increase in revenues and larger annual contributions to the Houston Public Library System, is a greater energy.

“The fixes we had to make needed to touch every piece of the group. There was always a core group of passionate individuals in The Friends, and the changes made over the past year allowed that passion to be productive for the library.”